Credit card holders advised to be thrifty

JAKARTA (JP): Credit card holders have been strongly advised to use their cards carefully while the monetary crisis continues to avoid running up large debts.

Those who do not yet own a credit card have been urged not to apply unless the card is essential and they are determined to use it responsibly.

There would be nothing unusual about this advice if it came from an economist or a consumer watchdog organization, but to hear it said by an executive of Citibank, one of the world's leading credit card issuers, comes as something of a shock.

Speaking to The Jakarta Post on Wednesday, the company's card business manager for Indonesia, John Lorimer, said that the economic turmoil had already pushed an average of 200 card holders to cancel their accounts with Citibank every month since March.

"People are giving up their cards, saying I don't need it anymore or I don't want to run the risk or getting into a credit problem," Lorimer said after signing a cooperation agreement between Citibank Indonesia and PT Pos Indonesia, the state postal service.

Under the deal, card holders are now allowed to pay their bills through 25 post offices in the Greater Jakarta Area.

According to Lorimer, Citibank, which has issued about 750,000 credit cards in Indonesia, has faced no serious problems as a result of the severe monetary crisis that first hit the nation last July.

"We've been very fortunate. Repayments are pretty much as you'd expected and delinquency is still within the normal levels.

"No change at all. We're witnessing a very responsible attitude in dealing with the crisis here," he said, refusing to give further details.

However, he admitted that the number of applications for new cards had dropped drastically over the past few months and was now almost half the normal rate of 10,000 new applicants per month.

"The number of applicants has definitely fallen. It has really slowed up since May and it's now running at about half of what it used to be," he said.

The crisis has also affected the way Citibank credit card holders spend their money, he said.

"Spend usage fell by about 10 percent during the first three or four months this year and then fell again by 25 percent," Lorimer added.

Priority

But for Citibank, the decline in customer spending is not as serious a problem as card holders defaulting on payments.

That is why Lorimer suggested Citibank card holders be more selective when purchasing goods using the cards.

His advice has apparently been taken to heart.

A 56-year-old housewife in Kebayoran Baru, who has held a Citibank card for years, plans to cancel her account because of her family's financial problems.

"I haven't had any income since I retired couple of years ago and my husband's business has deteriorated badly since the middle of last year," commented the woman, who asked for anonymity.

"I really want to give up the card. I don't need it anymore and the obligation is just driving me crazy. I Wish I could get the money to pay off my debt and then get rid of it for good," she said.

Mira, 26, a junior secretary with a local company, canceled her plans to apply for a credit card in April because she was not sure whether her income, about Rp 1.9 million a month, would be enough to cover the bills.

"I was really keen to get myself a card, but then the financial crisis turned everything into a mess. I don't want to drag myself into a debt problem," she said.

Citibank is now much more careful when selecting which applicants are issued with credit cards.

"We have to make sure that we're not giving cards to people who do not have the means to pay their bills," Lorimer said. (cst)